Back in June, the Pundit volunteered his services to help out the Fresh Produce & Floral Council by keynoting one of their luncheon events.
We were told that we attracted the largest crowd in years and the association issued an embarrassingly kind press release:
Fresh Produce & Floral Council LUNCHEON A HIT
Over 260 attendees from the produce and floral industry attended the June 17, 2009 Southern California Membership Luncheon at the Sheraton Hotel in Cerritos, California.
The third luncheon of the year, this event far exceeded estimated attendance. “Normally we have about 200 attendees at an event,” said FPFC president Carissa Mace, “to have close to 270 is amazing and we are quite pleased. In addition, we had a great deal of retail attendance, which is always important to attendees and sponsors. A great deal of independent markets were here today and it is nice to see that they are finding the events of value.”
The event featured Master of Ceremonies Jeff Schroeder, Manager, Southern California Produce Division of Unified Grocers. This was the first time anyone from Unified Grocers participated as an event master of ceremonies.
Jim Prevor, “The Perishable Pundit” and founder of PRODUCE BUSINESS magazine, was the keynote speaker at the event. Mr. Prevor spoke about the paradigm of the retail industry, illuminating the history of consolidation on the marketplace and where he sees the U.S. retail market going in the future. FPFC President Carissa Mace said, “Jim was extremely well received and although I have not seen the ‘official’ evaluation results, by all of the comments I have heard, attendees found the information useful and informative and Jim Prevor is always entertaining as well as educational. I’ve already had people ask when we can have him back!”
Keynote Luncheon sponsors were: California Leafy Greens Marketing Agreement, Coast Produce Company, Litehouse, Inc., Mann Packing Co., Inc., and Wild Rocket Foods. Association Sponsors were: A.M.S. Exotic LLC, Fresh Gourmet Company, ICD/Davis Lewis Orchards, Marie’s Dressings/Ventura Foods, Marzetti, Produce Marketing Association, Simply Fresh Fruit, Taylor Fresh Vegetables and Western Growers. Photo Sponsor was North Shore Greenhouses, Inc. and Décor Sponsor was Kendall Farms.
The next FPFC Southern California Luncheon is set for August 12, 2009, and will feature a program turned over to the City of Hope, a premier research hospital in the Los Angeles area.
We were certainly glad to help sell some tickets to the event and enjoyed the hospitality of so many of our friends from Southern California.
One serendipitous event was that one of the Keynote Sponsors happened to be none other than Wild Rocket Foods, one of the British transplants that Tesco brought with it from the United Kingdom when it launched its Fresh & Easy operation in the US. Now those who have been following our coverage of Fresh & Easy are familiar with Wild Rocket, but the luncheon marked the beginning of an offensive by Wild Rocket to sell to customers other than Fresh & Easy.
Now, though much of our coverage of the Fresh & Easy program has been critical, that is not because we have any bone to pick with Tesco; it is because the concept has not been successful and our job is to analyze the reality of the situation and see what we can learn from it.
Now we have always encouraged support of industry associations, and indeed, in many pieces, including here, here, here and here, we have called for Tesco to follow the American practice and join the produce trade associations, including the Fresh Produce & Floral Council.
Tesco has chosen instead to isolate itself from the flow of information and contacts that such activity can provide, which, in part, accounts for its failure to date in the United States.
Although Tesco’s decision is regrettable, it is, of course, laudable that Wild Rocket is a member and is now a sponsor, and we were happy to be seated up on the dais with representatives of all the keynote sponsors.
Now we see that as part of this effort to sell to customers other than Fresh & Easy, Bob Aiklen, who became CEO of Wild Rocket Foods in May, is doing a little press offensive. Bob recently gave an interview to Kimberly Pierceall of The Press-Enterprise. It ran the interview under the title Wild Rocket Foods CEO is Shooting for Success:
Bob Aicklen wants to make it clear. His company, Wild Rocket Foods, is not Fresh & Easy. The latter is the company’s largest and, for now, only customer.
Aicklen, who became chief executive officer of the company in May after working at PepsiCo for 20 years, hopes to send his company’s fresh produce, packaged salads and juices to other grocery store shelves nationwide, and Fresh & Easy is fine with that.
“They’re very interested in our success. Having new business is important to our future,” he said.
Q: What’s the biggest challenge you see so far for this industry?
A: It’s a constant challenge to make sure your food safety and quality is perfect. And so we work at that everyday, you just can’t rest. Fortunately at Wild Rocket Foods, we put together a state-of-the-art world-class facility … The other challenge is just how do you handle growth. We are a young company, we’re doing well and we have a terrific opportunity to grow and grow fast. So how do we get 350 people ready to handle that growth, and that’s what I’m working on.
Q: Would growth involve moving outside your Riverside headquarters or stay here and expand?
A: We will expand this probably 30 to 40 percent. We have the capability based on the footprint. We are not at full capacity. We have lots of capacity left in the plant. So over the next few years we’ll probably be here, but we do have plans for Northern California and the Midwest and then farther down the road in the east — New Jersey, Atlanta, depending on where the business is. We clearly are a growth company and intend to expand.
Q: What’s the advantage to being in Riverside?
A: The reason we came is because of Fresh & Easy, so we put ourselves within a half a mile of Fresh & Easy, which makes the distribution challenge very easy to the major customer. But California is the place you want to be in the produce business. I’d say 80 percent of what we get is within 300 to 400 miles from here, coming out of Northern California or the valley or even east into the Arizona area.
The proximity to the growers is very important. Any business that we would do across the pond, we have excellent shipping opportunities out of Long Beach and Los Angeles.
Q: How do you supply Fresh & Easy, which advertises food and produce at a value, by keeping prices low considering the volatility in the commodity markets?
A: You have to know what’s coming, you have to be in front of the game, you have to have different suppliers also. We go for quality first but we also have to get the value to our customers, so it’s a constant game, if you will.
It’s a constant discussion and knowing what’s coming, what the weather patterns are, what’s going on with certain commodities so that we can get the best value for us and the customer … Pineapples have been a challenge. We would buy pineapples from Hawaii and we weren’t happy with the quality. They had some rain back in October that caused some problems now, which is an interesting thing I’m learning as I get into this business, so we shifted to Costa Rican pineapples.
Q: Where do you see Wild Rocket in five years?
A: I think in five years we could be anywhere from six times to eight times where we are today as far as revenue and size.
We suppose it is a fine interview for a local consumer paper but to the trade it comes across as somewhat surrealistic.
We are quite sure that Fresh & Easy is OK with Wild Rocket selling to other people. Wild Rocket is a key component of the Fresh & Easy system, and so Tesco would like to see them stay in business, preferably without a need for Tesco itself to lend money to Wild Rocket. Last year, Tesco filed a lien against the inventory and proceeds such as accounts receivable of Wild Rocket. Normally a customer wouldn’t have such a lien, so this indicates that the relationship between Wild Rocket and Tesco goes beyond that which is typical in a supplier/customer relationship.
Of course, the importance of Wild Rocket to Fresh & Easy/Tesco and the fact that Tesco may have some financial and operational interest in seeing Wild Rocket succeed both weigh against other major retailers supporting Wild Rocket. Clearly, Wal-Mart, Safeway and Kroger will all be happy to see Wild Rocket’s problems become Tesco’s problems.
Despite the brave talk in the interview about the great difficulty of handling growth, Wild Rocket’s challenges to date have been a fantastic business school case study of the opposite: What does a business do when it is all geared for growth and the growth doesn’t come?
Vendors tell us that produce sales at Fresh & Easy are about 20% of where they were projected to be by this date. That sounds horrible but, in fact, produce is the superstar of the Fresh & Easy debut; many grocery items are in far worse shape. Still, Wild Rocket’s efforts to sell people other than Fresh & Easy is best understood as an attempt to utilize spare capacity made available by Fresh & Easy’s failure to grow as scheduled.
Can Wild Rocket succeed in this effort? It certainly has some nifty products. At the FPFC meeting it was showing off a nice juice line, which is a fairly hot category.
We would think pursuing sales outside of Fresh & Easy market areas, to foodservice and to independent and ethnic supermarkets, probably through wholesalers, would be the best shots.
Certainly, Wild Rocket could identify a wholesaler on each market it thinks is geographically viable and start consigning product. Wild Rocket would probably lose money initially but, in time, could build up a trade as its brand gets better recognition. It could also try to ride the private label wave.
Unfortunately, although Wild Rocket has improved its payment practices since we wrote about it here, it has left a bad taste in the mouths of many top shippers. There is an interesting part of the interview in which Bob Aiklen speaks about the need for “different” suppliers:
“…you have to have different suppliers also. We go for quality first but we also have to get the value to our customers, so it’s a constant game, if you will.”
Of course, to many vendors who took on the “Category Champion” role and invested substantially to meet the standards and specifications that Tesco, working through Wild Rocket, dictated, it is no game at all to find themselves unable to recoup their investments because a chain that claimed to value high standards decided it really valued low prices.
Several of the best vendors are no longer working as Category Champions with Fresh & Easy or Wild Rocket Foods. There were just too many meetings, too many idiosyncratic demands, for too little business.
After a career at Pepsi and P&G, Bob Aiklen is just learning the produce business and has stepped into a difficult situation. It is said that Steve Jobs wooed John Sculley, another former Pepsi executive, to Apple by suggesting he had two choices: To sell sugar water or to change the world.
Tesco and Wild Rocket rolled into the American produce industry insisting they knew better than everyone how things should be done and insisting the industry change to accommodate the Tesco way. They alienated produce industry executives all across the country. Maybe it will take another man from Pepsi to worry less about changing the world and more about finding the value in the experience of so many produce people.
We wish Bob Aiklen a long and prosperous tenure at Wild Rocket Foods.